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Doesn’t matter what party is in power; if we think the government is blowing it, we say so. Here’s my editorial on provincial debt.

Mismanagement of debt links all political parties

When Premier Gordon Campbell was in opposition, he railed against the New Democratic government’s economic record.

“Even in a recession, you still balance the budget,” he admonished the NDP in 1995. He was harshly critical of the government’s out-of control spending and rising debt and vowed his Liberal Party would do things better. The Liberals promised no-nonsense economic management. “We need to take a more aggressive approach to pay down the debt,” said then Liberal finance critic Fred Gingell. Campbell expanded that statement into an ideological call to arms. “If people don’t like the idea of cutting costs of government, cutting debt and cutting taxes,” he said, “they should vote for another party.”

In 1996, Campbell promised to reduce the provincial debt by $2.3 billion over four years. “Debt,” he said, “is the silent killer of the services we depend on.”

But that was then …

A look at the relative economic performance of the NDP government from 1991 to 2001 and the Liberal government thereafter reveals that neither party has had much success in putting a dent in debt. As Campbell himself pointed out, no party in a generation — Conservative, Liberal, Social Credit or NDP — has managed to curb spending or borrowing. His own government is no exception.

In fact, in absolute dollar terms, NDP and Liberal governments ran up roughly the same amount of debt over the same number of years. From 1991 to 2001, the NDP increased total provincial debt from $20 billion to $33.8 billion. From 2001 to 2010, the Liberals raised it from $33.8 billion to $47.8 billion. Both parties are within a rounding error of $14 billion on this score, percentage differences notwithstanding. The Liberal government expects debt to rise to $52.4 billion next year and to $55.9 billion the following year, putting it in a league of its own.

Total provincial debt per capita in 2001 was $8,321, according to the NDP’s final budget. The latest Liberal budget estimated per capita debt of $10,556 in the current fiscal year. Governments have long found it convenient to shift debt to Crown corporations and agencies, allowing the government of the day to claim a lower debt figure called taxpayer-supported debt. But even here the Liberals have no bragging rights. In 2001, taxpayer-supported debt per capita was $6,018; the 2010 budget estimate is $7,459. It’s worth noting that the population of B.C. increased by about 500,000 over the decade.

The overused debt-to-equity indicator gives the Liberals a slight edge; 24.3 per cent compared with the NDP’s 27 per cent. But gross domestic product — the denominator in this calculation — was $196.3 billion in 2010 and $125.1 billion in 2001. NDP operational spending was in the range of $20 billion a year. The Liberal government has doubled it.

What makes the Liberal performance even more distressing is that it began with such promise. In its early years in office it reduced the debt by about $5 billion. By the start of its second term, however, it seemed to have lost its way. During the NDP years, the business community was quick to condemn what it saw as profligate spending and mounting debt. The Business Council of B.C., the B.C. Construction Association, the Chartered Accountants of B.C., the Canadian Federation of Independent Business and the Board of Trade, among others, did not hesitate to accuse the NDP government of fiscal incompetence. Where are those voices now that the Liberal government is heading down that same road?

It seems self-evident that public finances should not be a partisan political issue. All parties should recognize the limits of government and the benefits to be derived from low debt, fair taxation and a vibrant private sector.

Bringing spending and debt under control is a vital function of a responsible government. Dereliction of this all-important duty leads to the kinds of consequences that are now undermining civil society in Greece. British Columbians don’t want to follow that path.

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